Copper rebounded to a three-week high on Wednesday as the market brushed aside weak U.S. economic growth data and refocused on falling global inventories.
Copper went into the red after data showed U.S. gross domestic product fell at a 2.9 percent annual rate in the first quarter, instead of the 1 percent reported last month.
But the metal bounced back later in the session as investors realised that the U.S. economy was on track to recover in the second quarter and so returned their attention to shortages in the copper market.
"Copper is macro sensitive so it came off together with equities and everything else after looking at the headline data," said analyst Andrey Kryuchenkov at VTB Capital.
"But once the market data was digested, it didn't look so bad and copper turned back to its tight fundamentals. Its technical uptrend is well intact and we'll probably go back up to resistance of $6,970-$7,000."
London Metal Exchange (LME) copper for delivery in three monthsfell to a session low of $6,842.25 a tonne before bouncing to a high of $6,926.75, up 0.7 percent.
It failed to trade in closing open outcry activity and was last bid at $6,914.50.
Metals prices were lifted earlier this week after China's vast manufacturing sector showed its targeted stimulus was successfully filtering down to small private enterprises such as metals manufacturers.
LME copper inventories, which are down 57 percent this year, fell an additional 900 tonnes on Wednesday.
Geopolitical concerns, however, were still weighing on the market. "The other issue is the escalation of violence in Iraq and the effect on sentiment. Metals will maybe struggle to push higher," said William Adams, head of research at Fast Markets.
Europe's top share index slipped to a three-week low as concerns that violence in Iraq could escalate further prompted investors to take refuge in safer assets such as German bonds.
NICKEL SHINES
Nickelwas the strongest performer, closing up 2.5 percent at $18,575 per tonne. The metal has gained more than 30 percent this year on Indonesia's ore export ban, but the price has fallen around 16 percent since mid-May.
While the Indonesian ban is expected to create shortages eventually, the market is still working through a legacy of high stocks from years of surpluses.
"Right now, for the next leg up, I think what you need to see a proper decline in LME inventories. Until then you will see a rangebound market," Michael Widmer, metals strategist at Bank of America Merrill Lynch, told a presentation in London.
He is targeting a rise to $26,000 a tonne next year.
Zincended 0.32 percent firmer at $2,182 per tonne after touching a 16-month high earlier this week while lead shed 0.76 percent to finish at $2,167 after touching a five-month peak on Tuesday.
The global market for refined zinc is expected to be in deficit by 117,000 tonnes this year and refined lead in deficit by 49,000 tonnes, the International Lead and Zinc Study Group
Copper went into the red after data showed U.S. gross domestic product fell at a 2.9 percent annual rate in the first quarter, instead of the 1 percent reported last month.
But the metal bounced back later in the session as investors realised that the U.S. economy was on track to recover in the second quarter and so returned their attention to shortages in the copper market.
"Copper is macro sensitive so it came off together with equities and everything else after looking at the headline data," said analyst Andrey Kryuchenkov at VTB Capital.
"But once the market data was digested, it didn't look so bad and copper turned back to its tight fundamentals. Its technical uptrend is well intact and we'll probably go back up to resistance of $6,970-$7,000."
London Metal Exchange (LME) copper for delivery in three months
It failed to trade in closing open outcry activity and was last bid at $6,914.50.
Metals prices were lifted earlier this week after China's vast manufacturing sector showed its targeted stimulus was successfully filtering down to small private enterprises such as metals manufacturers.
LME copper inventories
Geopolitical concerns, however, were still weighing on the market. "The other issue is the escalation of violence in Iraq and the effect on sentiment. Metals will maybe struggle to push higher," said William Adams, head of research at Fast Markets.
Europe's top share index slipped to a three-week low as concerns that violence in Iraq could escalate further prompted investors to take refuge in safer assets such as German bonds.
NICKEL SHINES
Nickel
While the Indonesian ban is expected to create shortages eventually, the market is still working through a legacy of high stocks from years of surpluses.
"Right now, for the next leg up, I think what you need to see a proper decline in LME inventories. Until then you will see a rangebound market," Michael Widmer, metals strategist at Bank of America Merrill Lynch, told a presentation in London.
He is targeting a rise to $26,000 a tonne next year.
Zinc
The global market for refined zinc is expected to be in deficit by 117,000 tonnes this year and refined lead in deficit by 49,000 tonnes, the International Lead and Zinc Study Group
